The Westpac-McDermott Miller quarterly Consumer Confidence Index fell 2 points to 114.8 in the December quarter.
A reading above 100 indicates optimism.
Westpac's economists said confidence fell by more in rural regions, which it puts down to Fonterra cutting forecast dairy payouts.
Consumers in the main urban centres are more upbeat, but less so than Westpac expected given falling petrol prices and mortgage rates.
Near term economic optimism fell from a net 18 percent to 16 percent, its lowest since September 2013.
Longer term economic optimism edged down, from a net 29 percent to 27 percent, the lowest since mid 2012.
Households are also more downbeat about their own financial situation.
A net 3 percent said their finances had deteriorated in the past year, and respondents were less optimistic their finances would improve in the coming year.
Spending intentions held up a little better, with the number of people saying it was a good time to buy a major household item little changed at net 26 percent, while those saying they had increased their spending on entertainment and eating out remains close to post 2007 highs.
Falling fixed mortgage rates are also having an impact, with the proportion of people saying they would use a $10,000 cash windfall to repay debt falling to its lowest level since records began in 2008.
The survey, which was conducted between 1 December and 11 December, polled 1557 people, and has a margin of error of 2.5 percent.
